"Adjusting Previous Value Scale to Match Contribution Amount"
The government has decided to accept Indonesia's proposal to reduce its contribution to the development of the Korean fighter jet KF-21 from 1.6 trillion won to 600 billion won.
On the 8th, the Defense Acquisition Program Administration (DAPA) stated in materials distributed to the Ministry of National Defense press corps, "The Indonesian side proposed adjusting their contribution to 600 billion won by 2026, the end of the KF-21 system development phase," and added, "We are currently pushing for an adjustment to 600 billion won, which Indonesia can pay." DAPA plans to decide whether to accept Indonesia's proposal after consultations with related ministries such as the Ministry of National Defense and the Ministry of Economy and Finance. A final conclusion is expected at the Defense Acquisition Program Promotion Committee meeting, possibly by the end of this month.
On the 17th, the domestically produced supersonic fighter jet KF-21 was unveiled at the 'Seoul International Aerospace and Defense Exhibition (ADEX) 2023' held at Seoul Airport in Seongnam, Gyeonggi Province. Photo by Jinhyung Kang aymsdream@
Indonesia agreed in January 2016 to bear about 20% of the total KF-21 development cost, approximately 1.7 trillion won, until June 2026 when development is completed, and to receive related technology transfers. This amount was later reduced to about 1.6 trillion won. However, recently Indonesia proposed to our side that they would only pay 600 billion won, about one-third of the originally promised amount, and in return, receive technology transfers of the same reduced scale.
DAPA is pursuing a plan to adjust the scale of technology transfer value to Indonesia in line with the revised contribution amount. A DAPA official explained, "Continued non-payment of Indonesia's contribution during the system development phase and near the deployment stage could affect the development schedule, and delays in decisions regarding the contribution are expected to impact the KF-21 deployment as well."
The reduction in the total KF-21 development cost compared to initial estimates also seems to have influenced the judgment that Indonesia's contribution can be significantly cut. The KF-21 system development cost excluding armaments was initially set at 8.1 trillion won, but cost reductions during development are expected to bring it down to 7.6 trillion won. Accordingly, even if Indonesia's contribution is reduced from 1.6 trillion won to 600 billion won, the additional cost to be covered will be about 500 billion won, not 1 trillion won, according to DAPA.
On the 17th, the domestically produced supersonic fighter jet KF-21 was unveiled at the 'Seoul International Aerospace and Defense Exhibition (ADEX) 2023' held at Seoul Airport in Seongnam, Gyeonggi Province. Photo by Jinhyung Kang aymsdream@
Currently, the KF-21 development cost sharing ratio is 60% by the Korean government, 20% by the manufacturer Korea Aerospace Industries (KAI), and 20% by Indonesia. DAPA believes that by adjusting the sharing ratio to significantly reduce Indonesia's contribution, the shortfall can be covered by additional government funding and extra burden from KAI. A DAPA official said, "The insufficient funds can be secured through efforts by the government and the company," adding, "It is necessary to adjust the sharing ratio and secure the shortfall to ensure that the fighter jet development proceeds without disruption."
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